It’s Coming, Watch Out For These 4 Catalysts

Welcome to this week’s edition of “World Out Of Whack” where every Wednesday we take time out of our day to laugh, poke fun at and present to you absurdity in global financial markets in all its glorious insanity.

While we enjoy a good laugh, the truth is that the first step to protecting ourselves from losses is to protect ourselves from ignorance. Think of the “World Out Of Whack” as your double thick armour plated side impact protection system in a financial world littered with drunk drivers.

Selfishly we also know that the biggest (and often the fastest) returns come from asymmetric market moves. But, in order to identify these moves we must first identify where they live.

Occasionally we find opportunities where we can buy (or sell) assets for mere cents on the dollar – because, after all, we are capitalists.

I can’t think of a time when Dutch elections mattered as much to the rest of Europe as they do today. The Dutch can be described as friendly people in a tiny relatively insignificant country who eat cheese, ride bicycles, and who, for some reason wear socks with sandals, but whose influence on and in broader Europe has been negligible.

And yet, as we sit just 14 sleeps out from Dutch elections the result is being anxiously awaited by traders across the world. Trigger fingers at the ready.

The firebrand Geert Wilders (PVV) – the Dutch version of Trump or Duterte – is set to ascend to the position of chief Dutch podium donut on the 15th of March.

“Forty years after the Swedish parliament unanimously decided to change the formerly homogenous Sweden into a multicultural country, violent crime has increased by 300 percent and rapes by 1,472 percent.

In an astounding number of cases, the Swedish courts have demonstrated sympathy for the rapists, and have acquitted suspects who have claimed that the girl wanted to have sex with six, seven or eight men.”

Perfect Storm

Folks, what we’re looking at is a clash of civilisations and a clash of cultures, all combined with the bankruptcy of social welfare systems, the repudiation of the ruling elite, and a repudiation of all that comes with it.

Like it or not, Europe is actually the periphery of a collapsing star. That star is the United States.

For now, the volatility and pain will be felt at the periphery which means that the core will remain stable. That “core” is currently being seen as Germany as we can see in the German bund yield curve. This “safety” currently being sought in bunds is likely fleeting and will quickly transfer to the real “core” of the collapsing star: the US. Brace for it.

To those who see the European glass as half full. I agree wholeheartedly.

And so here we sit: which way does it break?

As with any collapsing star, ultimately the star will collapse but not before the periphery collapses first.